As rolling blackouts continue to plague California, one company is hoping that a new $100 million investment will help it keep the lights on — by paying customers to turn the lights off.
On Monday OhmConnect said it received $100 million from Alphabet-backed Sidewalk Infrastructure Partners to build the largest distributed clean power plant in North America. SIP invested $20 million in OhmConnect directly, with the additional $80 million going towards building a virtual power plant, known as “Resi-Station.”
Founded in 2014, California-based OhmConnect acts as a power supplier during times of peak demand by taking energy offline. When the grid is overwhelmed, the company sends alerts to customers asking them to reduce usage by turning off the air conditioner or stopping the dryer, for example.
Even though OhmConnect isn’t generating power, it’s designated as a power plant, which means that it is paid for the energy it supplies by users cutting back. The company then passes on some of the savings to its customers, tracking usage through in-home smart devices. CEO Cisco DeVries said the amount paid to each customer depends on a host of factors including the current price of electricity. This year the company plans to pay its customers around $4 million.
OhmConnect works with dozens of vendors of smart home technology, including the Google Nest, a partnership that pre-dates the recent investment.
The company is also making the grid greener since during peak demand the power plants that ramp up — known as peaker plants — are typically gas or oil powered, since they can ramp up at will, unlike solar or wind, for example.
If OhmConnect were a physical power plant it could turn to capital markets for financing, DeVries said, but its distributed network of thousands of customers all over the state proved tricky, which is where SIP comes in.
“They are actually funding us to build this new power plant as if it were physical, even though it’s all distributed,” DeVries told CNBC. “Not only is that [building the next-generation of the grid] essential for keeping the lights on, it’s also essential for decarbonisation. If we’re going to go to more and more renewable energy on the grid, we need to be able to flex demand in real time,” he said.
Much of the funding will be used to grow OhmConnect’s user base. The company currently has around 150,000 active customers in California, and through Resi-Station is expecting to add around another 750,000.
For SIP, the funding commitment is the first major transaction for its Resilia platform, which is focused on making electric systems bidirectional, transactive and distributed.
“With this distributed clean power plant … we are rethinking the structure of modern power grids, allowing them to function more like a symphony than a solo — a sequence of energy-taking and energy-giving systems that communicate and cooperate with one another to deliver electricity safely, cheaply, and efficiently,” Jonathan Winer, co-CEO of SIP, said in a statement.
SIP is independent from Alphabet-backed Sidewalk Labs.
SIP’s $20 million investment into the company directly leads OhmConnect’s Series C funding round. Prior backers include venture capital firms Floodgate and City Light Capital, based in Silicon Valley and NY, respectively, as well as Tom Steyer’s Radicle Impact.
OhmConnect’s expansion comes as California scrambles to find solutions for its outdated grid. Solar companies including rooftop installer Sunrun have also announced virtual power plants, while micro-grids are also popping up as a way to ensure grid resiliency.
“We are helping to democratize access to clean energy. … 40% of our customers are lower and moderate income, and we are often providing them the first smart device they’ve ever had, and the first tangible benefit from clean energy that they’ve had,” DeVries said.
OhmConnect also has operations in Australia and Canada, and plans to expand to Texas in 2021.
Source by www.cnbc.com